Indiana Alcohol Regulations Are in a State of Confusion

March 3, 2010

For release noon Tuesday March 2 and thereafter (680 words)

It is the public policy of Indiana “to regulate and limit the manufacture, sale, possession and use of alcohol and alcoholic beverages.” The words sound old-fashioned but there’s more than Prohibition-era thinking behind them. We limit access to alcohol to protect children and to reduce side effects such as drunk driving, alcoholism and domestic violence, to name a few.

So why is booze almost as easy to buy as bread?

If you don’t think that’s true, drive to the nearest intersection with a retail center. At my neighborhood Village Pantry, cases of Coors Light and jumbo bottles of Cobra are the first thing I see when I enter the door. Across the street at CVS, beer, wine and hard liquor can be found with the Cheetos. My neighborhood Target sells alcohol in the same aisle as orange juice. And at my neighborhood Kroger, vodka has a featured place not far from the produce.

By law alcohol is a regulated product — permits to sell it are allotted based on population and subject to caps — but the way we treat it in Indiana is coming close to laissez faire. We need to rein in the horse before it gets completely out of the barn.

The opportunity to do so presents itself on two fronts, one in the courts and the other in local communities. A lawsuit filed by the Indiana Association of Beverage Retailers in Marion Superior Court is challenging the state’s dealer permit approval practices. At the same time, county alcoholic beverage boards are reviewing almost 200 requests filed by Walgreens to sell beer and wine at its Indiana stores.

It would be easy to write off the controversy as a turf war between package stores and everybody else: the convenience stores, supermarkets, and drug store chains hoping for higher profit margins.

To do so is to ignore the reasoning behind the law. The package stores — places like 21st Amendment and United Package Liquors that sell alcohol in bulk — were essentially created by the state to ensure a controlled environment for sales. Over the years other retailers have been granted permits to sell wine, beer and liquor on almost the same terms as the package stores but in a less controlled setting.

The Kroger store near my home is a case in point. Because it has a pharmacy on site, the store was able to get a three-way license for beer, wine and hard liquor, the same things a package store sells. But the pharmacy is in a far back corner that most customers don’t pass. The alcohol is up front and visible to all. What’s the public policy rationale for that?

Yes, a free market means more price competition, but it comes with social costs. Studies show an increase in violent crime — assault, domestic battery and armed robbery — in zip codes with high density of alcohol licenses. Property crimes are higher too.

“Our concern is not Walgreens,” says Nancy Beals of Drug Free Marion County. “Our concern is that a Walgreens is close to a CVS, which is close to a grocery store, which is close to a package liquor store; liquor permits are overly concentrated.”

Concentration has gotten worse since 2008 when the legislature rewrote beer permit rules. The Indiana Alcohol and Tobacco Commission has interpreted the law so that groceries and drug stores have separate quotas. As a result, the Association of Beverage Retailers says, permit numbers in some communities, including Columbus and Fort Wayne, exceed what should be allowed. That’s what prompted the lawsuit.

It’s ironic that the courts may resolve a policy question. But lawmakers haven’t shown the stomach to wade into the battle between package stores and other retailers.

It’s a simple choice. Should consumers be able to buy alcohol in a free market or should it remain the policy of Indiana “to regulate and limit the manufacture, sale, possession and use of alcohol and alcoholic beverages”? If we choose the latter, we need stricter permit caps. And we really shouldn’t be selling vodka alongside orange juice.

Andrea Neal is a teacher at St. Richard’s School in Indianapolis and adjunct scholar with the Indiana Policy Review Foundation. Contact her at aneal@inpolicy.org.

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